Two Ohio coal-fired plants to close, deepening industry decline

NEW YORK (Reuters) - Electricity company Dayton Power & Light said on Monday it would shut down two coal-fired power plants in southern Ohio next year for economic reasons, a setback for the ailing coal industry but a victory for environmental activists.

The announcement came as Republican President Donald Trump follows through on a campaign promise to restore U.S. coal jobs that he says have been destroyed by green regulations ushered in by his Democratic predecessor Barack Obama.

Dayton Power & Light, a subsidiary of The AES Corporation, said in an emailed statement that it planned to close the J.M. Stuart and Killen plants by June 2018 because they would not be "economically viable beyond mid-2018."

Coal demand has flagged in recent years due to competition from cheap and plentiful natural gas.

The plants, located along the Ohio River in Adams County, employ some 490 people and generate about 3,000 megawatts of power for coal.

The closure follows negotiations between Dayton Power & Light, the Public Utilities Commission of Ohio and stakeholders like the environmental group the Sierra Club over whether the company should be allowed to raise electricity prices to pay for upgrades to keep the plants open.

The Sierra Club, which has been advocating coal plant closures for years to help combat pollution and climate change, argued that the plants were a bad investment.

The Sierra Club's "Beyond Coal" campaign director, Bruce Nilles, cheered the closure plans, saying it brought the total number of U.S. coal plants scheduled to be retired to 250.

"This milestone is a testament to the commitment Americans have to cleaner air and water - and the power of grassroots action to create healthier communities," Nilles said in an email.

The plants sit at the heart of a region Trump vowed to revitalize with more jobs and greater economic security during his 2016 campaign. As part of his pledge to reinvigorate the area, Trump also said he would "bring back coal."

A White House spokeswoman did not immediately respond to a request for comment.

Cheap natural gas from record shale production over the past several years has kept power prices low, making it uneconomical for generators to upgrade older coal plants to meet increasingly strict environmental rules.

As a result, U.S. power companies retired or converted over 14,000 MW of coal-fired plants in 2016 after shutting over 17,000 MW in 2015, the most in any year, according to Thomson Reuters data.

In 2015, coal used to produce electricity fell to its lowest level since 1984, according to Federal Energy Regulatory Commission data. That year, coal-fired generators produced 33 percent of the nation's total generation, down from over 50 percent in 2003.

The Sierra Club said it would try to help the plant workers find new jobs. "We advocate for equitable transition when this type of thing happens," Sierra Club "Beyond Coal" campaigner Dan Sawmiller said in a telephone interview.

(Reporting by Emily Flitter; Additional Reporting by Scott DiSavino in New York and Richard Valdmanis; Editing by Bernadette Baum and Richard Chang)